FM: Role of IT Sector is Crucial in Order to Promote E-Governance for Empowering Citizens

The Union Minister for Finance, Corporate Affairs and Information & Broadcasting, Shri Arun Jaitley at the Pre-Budget Consultation with IT Sector (Hardware and software), in New Delhi on January 14, 2015.

FM: Role of IT Sector is Crucial in Order to Promote
E-Governance for Empowering Citizens; to Promote the Inclusive and Sustainable
Growth of the Electronics, IT and ITeS Industries and Enhancing India’s Role in
Internet Governance

The Union Finance Minister Shri Arun Jaitley said that the
role of IT sector, be it hardware or software, is crucial in order to promote
e-governance for empowering citizens. He said that the role of this sector is
also important in promoting the inclusive and sustainable growth of the
electronics, IT and ITeS industries and enhancing India’s role in internet
governance. The Finance Minister said that at a larger scale, the role of IT sector
is crucial for boosting manufacturing sector in the country. He said that
reviving manufacturing, diversifying its base and equipping it for robust long
run expansion is one of the major challenges of our economic management in the
next five years. The Finance Minister, Shri Jaitley was making his Opening
Remarks during the Pre Budget Consultative Meeting with the IT (Hardware &
Software) Groups here today. The Finance Minister further said that the
government introduced ‘Make in India’ initiative in this context which refers
to the production in India at a competitive price with global quality
standards. The Finance Minister Shri Jaitley said that the idea is that large
scale production at competitive price in India for the global market will
create gainful employment and will help India reap demographic dividend,
increase their purchasing power faster, and finally, with rising incomes will
generate a huge market within India.

The Finance Minister, Shri Jaitley said that the overall
rapid growth of the section in recent years, including exports earnings of
about US$86 billion demonstrate sustained competitiveness and an ability of the
sector to overcome structural deficiencies related to business and policy
environment. He further said that the portfolio and capabilities of Indian
IT/ITeS industry have significantly expanded, and is perhaps the only country
other than the USA, with the capability of providing end to end services in IT,
BPM, Software Products and Engineering, Research and Development and more
recently in Internet and e-Commerce.

The Finance Minister Shri Jaitley said that the success of
‘Digital India’ initiative will necessarily rely on the IT/BPM sector for
design, deployment and its continued success. Realization of ‘Make in India’ is
inseparable from ICT sector. He said that modern manufacturing relies on IT for
efficiencies and innovation leading to ‘know-why’ of products and processes. He
further said that similar contribution from the IT sector can be made in
healthcare, education and defence etc. He said that the Government’s focus on
financial inclusion will require enabling financial transactions on the mobile
and internet for greater access.

The Finance Minister Shri Jaitley said that the Government
is, therefore, keen to leverage the inherent strength of the IT sector as it
charges the growth map for the country and would certainly take further policy
and regulatory initiatives based on the inputs from the participants in today’s
meeting.

This was for the first time that the Finance Minister held
an exclusive Pre-budget meeting with the representatives of IT industry.

Various suggestions were made by representatives of IT
industry during the meeting. Major suggestions include incentives for
setting-up of data centers within the country. It was said there is a need to
give tax incentives for building infrastructure for large data centers and
cloud services within the country to ensure data security as well as to have a
big network of large software products companies within the country. Besides
it, other suggestions include more budgetary allocation for digital literacy
programme in order to make Digital India a success, to promote innovations by
allowing angel funding, stable tax regime, direct tax benefits for the sector,
tax benefits for cashless transactions, resolving issues relating to double
taxation on software products, transfer pricing and duty drawback. There is
need for clarity on royalty payment on software products (whether goods or
services)

Other suggestions include initiatives to improve overall
business environment including ease of doing business and setting-up of a High
Level Committee for industry interactions. In order to make ‘Make in India’
success, extend investment allowance for efficiency enhancing tools like IT
products, remove exclusion for expenses towards software tools for R&D
deduction, incentives for digitization of SMEs, tailor incentives for skill
development and employment generation for SMEs and large companies,
revision/clarifications on export related issues like foreign tax credit
policy, drawback scheme for services, carry backward of business losses etc.
among other. Suggestions were made for clarity in service tax between domestic
and overseas vendors for e-commerce and export proceed realization (SEZ). There
is need for MAT rate to be rationalized, applicability on transfer pricing on
companies eligible under section 10A and 10 AA and introduce duty drawback
scheme for software services like goods among others.

FM: Role of IT Sector is Crucial in Order to Promote E-Governance for Empowering Citizens
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